Exploration & Production | Operational Updates

Painted Pony Shows Record Production Ending 2013

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Painted Pony Petroleum Ltd. has provided the following update:

Highlights include:

• field estimated production volumes in November and December 2013 averaged a record 9,970 barrels of oil equivalent per day (boe/d), weighted 86% towards natural gas;
• estimated production volumes in the fourth quarter of 2013 averaged a record 9,350 boe/d, weighted 84% towards natural gas;construction has begun on the Company's 25 million cubic feet per day (MMcf/d) gas dehydration and condensate stabilization facility at Townsend, with completion of the plant expected by the end of the first quarter of 2014;
• Painted Pony has commissioned an engineering study for a refrigeration and gas plant facility with capacity of up to 190 MMcf/d, which is expected to be built in 2015;
• Painted Pony continues to evaluate opportunities on its light oil assets in southeast Saskatchewan, including exploration opportunities in the Torquay/Three Forks formations at Flat Lake; and
• the Company has initiated a natural gas hedging program through the first quarter of 2015 on up to 19.0 MMcf/d of natural gas production at an average fixed AECO price ranging from $3.99 CDN/thousand cubic feet (Mcf) to $4.10 CDN/Mcf of natural gas.

Production

Painted Pony is pleased to announce that it achieved record field estimated production rates for November and December 2013 that averaged 9,970 boe/d, weighted 86% towards natural gas. Additionally, estimated production volumes for the fourth quarter of 2013 averaged 9,350 boe/d, weighted 84% towards natural gas.

Production for the first quarter of 2014 is estimated to remain flat and is expected to increase to approximately 11,500 boe/d for the second quarter of 2014.

Montney Natural Gas Operations

Construction of the Company's 25 MMcf/d Townsend gas dehydration and condensate stabilization facility has begun and is expected to be operational at the end of the first quarter of 2014. In addition to currently shut-in volumes at Townsend, two 100% working interest Montney wells at the 56-H/94-B-09 pad, which were drilled in the fourth quarter of 2013 are scheduled to be completed by the end of the first quarter of 2014 coinciding with the facility's start-up. The wells, which targeted the upper and lower Montney, will provide additional production volumes in the second quarter of 2014.

Painted Pony has commissioned an engineering study for a refrigeration and gas plant facility with an expected capacity of up to 190 MMcf/d. The plant, located at the Company's Townsend property, is expected to be built in 2015.

At Blair, Painted Pony has secured an additional 7 MMcf/d of firm processing capacity at the AltaGas plant, bringing total firm capacity to approximately 40 MMcf/d of natural gas. Further to the additional capacity at Blair, Painted Pony has scheduled a Daiber facility expansion for the third quarter of 2014 to 50 MMcf/d of natural gas from its current 25 MMcf/d capacity.

The Company is currently drilling a 100% working interest Montney well at the Blair 41-F/94-B-16 pad as part of a two-well (2 net) drilling and completions program on this pad in the first quarter of 2014. In addition, Painted Pony is moving a second rig this week to drill two 100% working interest Montney wells at the Blair 11-F/94-B-16 pad. Painted Pony plans to drill a total of 18 (17.0 net) Montney wells in 2014.

Painted Pony is also pleased to announce that in November 2013 it acquired a further 7,765 net acres (12 net sections) of Montney natural gas rights that are directly contiguous to the Company's core area. As at December 31, 2013, the Company had approximately 130,200 net acres (203 net sections) of Montney lands.

Light Oil Operations

Painted Pony continues to evaluate opportunities on its light oil assets in southeast Saskatchewan. In conjunction with recent industry activity in the Flat Lake area, the Company is assessing the potential of additional light oil bearing zones including the Torquay formation, of which Painted Pony has over 11,300 net acres (17 net sections) of rights on the Flat Lake property. The Company plans to drill a horizontal exploratory well (0.3 net) at Flat Lake in the first quarter of 2014.